Motorola Suspends Dividends Q4 Losses Reaches $3.6 Billion

Telecommunications company Motorola unveiled a larger than expected loss for the last quarter and took the decision to suspend its quarterly dividend to improve its cashflow.

The company posted a loss of $3.58 billion or $1.57 per share, compared to a small profit of $100 million the year before. Revenues fell by $7.1 billion in 2008 down from $9.6 billion in 2007.

The mobile device's division fell from $4.81 billion a year ago to $2.35 billion, leaving Motorola with an operating loss of $595 million. The company's downfall claimed the head of the company's chief financial officer Paul Liska.

Motorola's Chief Executive Officer, Sanjay Jha, acknowledged that Motorola's handset sales fell faster than the overall mobile phone market due partly to the fact that it is changing the type of phones it is selling, essentially duplicating Apple's approach.

Motorola, like Apple, will focus on selling more expensive mobile phones which carry a higher average selling price and generate more revenues per unit; it expects an improved portfolio as from the first half of 2010, which will include both Google Android and Windows Mobile models

The market share of the phone manufacturer fell to 6.5 percent, which is half what it was 12 months ago, and the smallest of the top five players. Motorola has already cut 7000 posts, with a significant portion coming from the mobile phone division, over the last few months to cut costs by $1.5 billion and save money.

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Our Comments

Motorola shares took a pounding as they are currently down 11.45 percent to just above $4.02. Over the last six months, Motorola's shares price has fell by nearly 54 percent, on par with Nokia and Research in Motion, the manufacturers of the Blackerry smartphone. In comparison, Apple fell only 41 percent over the same period.

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